Sunday, April 20, 2014
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When New Drugs Cost Too Much, We Can Just Say No

Expensive new drugs and devices may soon bankrupt our health care system. Some of them, of course, achieve miracles, but many are no better than what we already have. In health care, we tend to assume that newer is always better. But sometimes it is not. It just runs up the bill.

When New Drugs Cost Too Much, We Can Just Say No

By Robert I. Field, Ph.D., J.D., M.P.H.

Expensive new drugs and devices may soon bankrupt our health care system. Some of them, of course, achieve miracles, but many are no better than what we already have.

In health care, we tend to assume that newer is always better. But sometimes it is not. It just runs up the bill.

The problem is that patients want everything they can get, especially when they have a serious disease. Since the cost is often paid by their insurance plan, it is rarely a concern. Physicians and hospitals are usually more than willing to oblige their wishes. There is no one to put a stop to the spending spiral.

But that may be about to change. Last month, when confronted with an unpalatable price for a new drug, Memorial Sloan-Kettering Hospital in New York just said no and declined to purchase it.

And their refusal worked. Faced with the loss of business from one of its largest and most prestigious customers, the manufacturer, Sanofi, agreed to grant a 50% discount.

The drug involved is called Zaltrap and is used to treat colorectal cancer. Its original price of $11,000 a month was double that for a similar drug, Avastin. However, it is no more effective. Both drugs improve median survival by 1.4 months over conventional treatments.

The issue came to a head last month when three Sloan-Kettering physicians wrote an Op Ed in the New York Times explaining the hospital’s decision to reject Zaltrap because of cost. They described a new imperative in cancer care: “When choosing treatments for a patient, we have to consider the financial strains they may cause alongside the benefits they might deliver.”

Until now, it has been difficult for anyone in the health care system to push back against high prices. As discussed last month in the PhillyPharma blog, the Food and Drug Administration does not take cost into account when it reviews new drugs. Once a drug is approved, Medicare is required by law to cover it, and most private insurers follow Medicare’s lead.

However, unless someone decides that enough is enough, health care will soon become completely unaffordable. Even those with insurance will feel the effects in dramatically higher copayments and deductibles for expensive care. The best treatment in the world is of little use if no one can afford to obtain it.

Sloan-Kettering has shown that the medical community can make a start at a response. Prices will fall if the system starts to push back.

It has also reminded us that we can cut costs without compromising care. Newer treatments are not always better than existing ones. We should not reflexively pay exorbitant prices for them.

In the words of the president of the American Society of Clinical Oncology, Sandra M. Swain, “we must remember that the best medical care is not always the most expensive.”

Let’s hope that Sloan-Kettering’s action is the start of a trend. If it is, the cost curve might just start to bend.

Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
About this blog

The Field Clinic reports and analyzes health care laws, government policies, and political trends that are transforming the care we receive and the way we pay for it. Read more about our panel of bloggers here.

This blog is produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health-policy research and communication organization not affiliated with Kaiser Permanente. Portions of this blog may also be found on Inquirer.com and in the Inquirer's Sunday Health Section.

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Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
Jeffrey Brenner, MD Founder of the Camden Coalition of Healthcare Providers, Medical Director of the Urban Health Institute at Cooper University Healthcare
Andy Carter President & CEO, The Hospital & Healthsystem Assoc. of Pa.
Robert B. Doherty Senior Vice President of Governmental Affairs & Public Policy American College of Physicians
Neil I. Goldfarb President & CEO of the Greater Philadelphia Business Coalition on Health
David Grande, MD, MPA Assistant Professor of Medicine at the University of Pennsylvania
Tine Hansen-Turton Chief Strategy Officer of Public Health Management Corporation
Drew A. Harris, DPM, MPH Director of Health Policy Program at the Jefferson School of Population Health
Antoinette Kraus Director of the Pennsylvania Health Access Network
Laval Miller-Wilson Executive Director of the Pennsylvania Health Law Project
David B. Nash, MD, MBA Founding Dean of the Jefferson School of Population Health
Howard J. Peterson, MHA Managing Partner of TRG Healthcare, a national healthcare consulting firm
Donald Schwarz, MD, MPH Deputy Mayor for Health & Opportunity and Health Commissioner for the City of Philadelphia
Paula L. Stillman, MD, MBA Healthcare consultant with special expertise in population health and disease management
Elizabeth A. W. Williams Senior Vice President & Chief Communications Officer for Independence Blue Cross
Krystyna Dereszowska A third-year law student concentrating in health at Drexel
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